In A Bearish Market, Charities Still Bullish

Foundations Set Grants Mark Again

According to an annual report to be released Tuesday by the Foundation Center, foundations gave out $27.6 billion last year, up more than 18 percent from 1999--the fifth consecutive annual double-digit increase.

"Foundations have grown so rapidly since the mid-1990s that not even a volatile stock market and slowing economy could keep them from posting record growth in grant dollars," said Sara Engelhardt, president of the Foundation Center, an independent clearinghouse on foundation data.

If stock prices continue to fall, shrinking the value of foundation holdings, a decline in grants will eventually follow. Still, Engelhardt said, the huge assets that foundations have amassed should help them weather a short-term downturn.

Whereas philanthropy tended to operate at the margins of policy throughout the 1970s, '80s and early '90s--with most foundations dividing up grant money to support pilot studies, research reports or small community-based programs--donors today increasingly practice "high impact" philanthropy, in which they look to transform an entire field.

They have been led by George Soros, Bill Gates and Ted Turner.

In the early 1990s, grants of $10 million were a rarity. And nationwide, most grants are still for $50,000 or less. Nevertheless, a big commitment is now one of more than $100 million. Last year the Lilly Endowment gave $105 million for genome research at Indiana University, double the size of any grant it had made in prior years. The Ford Foundation announced a $330 million global scholarship program, its largest grant ever.

And the Bill and Melinda Gates Foundation started a $1 billion scholarship program for minority students.

"Traditionally, when foundations didn't have enough money to have a major impact on an issue, they tried to influence social policy," Engelhardt said. "Now people have been able to think bigger, and they tend to pick things where they can make a difference."

For the Gates Foundation, one such thing has been childhood vaccinations in the world's poorest countries, for which it pledged $750 million over five years.

If an organization is new to philanthropy and needs to find a place where it can make a difference, "vaccinations are an obvious one," said Patricia Stonesipher, president of the Gates Foundation, the nation's largest, with an endowment of $20 billion.

As with most of Gates' grants, the money will be funneled through existing organizations with experience in the field.